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June 19, 2008

Processors to Set Own Prices: Shrimp Body Disagrees With Pledging Scheme

by Sam Savage

By Walailak Keeratipipatpong, Bangkok Post, Thailand

Jun. 18--SURAT THANI -- Seafood processors have countered the recent shrimp-pledging programme of the Commerce Ministry by setting their own weekly shrimp benchmark prices, which are lower than pledging prices.

The weekly prices, based on farm production costs and export prices, will be announced every Monday and would be used as median prices for food processors and cold-storage operators to buy from farmers nationwide, according to Poj Aramwattananont, president of the Thai Frozen Foods Association.

To reduce potential pressure from the raisers, Mr Poj said the association would also persuade raisers nationwide to share their comments on the weekly prices.

The association disagrees with the pledging programme and sees it as an idea from giant agro-business groups.

"In the past, we've allowed parties not in the business to meddle with the industry. But now I want processors to work closely with farmers and set our own prices in order to stabilise shrimp prices in the long term," Mr Poj said at a meeting this week in Surat Thani where he met with farmers and cold-storage operators from upper southern provinces.

He said the pledging price agreed to earlier this month between groups of farmers and the Internal Trade Department of the Commerce Ministry did not reflect genuine market prices but was based on prices at the popular Mahachai seafood market, with inaccurate demand and supply figures.

As the association controls up to 70 percent of the local shrimp trade, it was justified in setting its own prices, he said.

The Internal Trade Department agreed on June 6 to use about 300 million baht to pledge a total of 10,000 tonnes of white shrimp or vannamei from farmers to prevent a further fall in shrimp prices.

The programme agrees to pay 140 baht per kilogramme for a size of 50 head per kg and 130 baht for 60 head per kg. The programme runs from June to October this year.

The attempt to announce weekly prices was intended to stabilise prices of the product, Mr Poj told more than 100 farmers from eight provinces in the upper south at the meeting.

The association's 31 member companies from Phuket, Surat Thani, Trang, Chumphon, Krabi, Phangnga, Ranong, and Nakhon Si Thammarat will be ready to use the new benchmark to buy shrimp from farmers.

For the first week, prices for the 50 shrimp/kg size will be 120 baht a kg, 20 baht lower than those offered in the pledging scheme.

According to Mr Poj, the falling domestic prices have stemmed mainly from slow orders from the United States, the major shrimp importer that controls half of the market. The US has accused the Thai industry of using forced and child labor in shrimping.

Officials from the US Homeland Security Department, representatives from the International Labor Organisation (ILO) and non-governmental organisations finished their investigation last week but the result of the inquiries hasn't been released.